Finding 392931 (2023-001)

2 CFR § 2867.10 gives regulatory effect for the Department of Justice and 2 CFR § 1500.13(c)(5) gives regulatory effect for the Environmental Protection Agency for 2 CFR 180.305 which states that Non-Federal entities are prohibited from entering into a covered transaction with parties that are suspended or debarred or whose principals are suspended or debarred, unless the Federal agency responsible for the transaction grants an exception under 2 CFR § 180.135. 2 CFR § 180.200 identified “covered transactions” as non-procurement or procurement transactions at the primary tier, between a Federal agency and a person; or at the lower tier, between a participant in a covered transaction and another person. Procurement contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) are covered transactions if the contracts are expected to equal or exceed $25,000 or meet certain other specified criteria outlined in 2 CFR § 180.220. All non-procurement transactions (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless exempt by 2 CFR § 180.215. Concerning the Department of Treasury, 31 CFR 19.305(a) which states that Non-Federal entities are prohibited from entering into a covered transaction with parties that are suspended or debarred or whose principals are suspended or debarred, unless the Federal agency responsible for the transaction grants an exception under 31 CFR § 19.120.31 CFR § 19.200 identifies “covered transactions” as non-procurement or procurement transactions at the primary tier, between a Federal agency and a person; or at the lower tier, between a participant in a covered transaction and another person. Procurement contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) are covered transactions if the contracts are expected to equal or exceed $25,000 or meet certain other specified criteria outlined in 31 CFR § 19.220. All non-procurement transactions (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless exempt by 31 CFR § 19.215. When a non-Federal entity enters into a covered transaction, the non-Federal entity must verify that the entity is not suspended or debarred or otherwise excluded. This verification may be accomplished by checking SAM exclusions (https://sam.gov ); collecting a certification from the entity, or adding a clause or condition to the covered transactions with that entity. Furthermore, the City of Columbus Purchasing Policy Manual - Bid and Proposal Evaluations - Federal Grants - Special Instructions provides "each department will review its Federal grants program policies and procedures for contract routing and update them immediately to include the following: A SAM.gov website review shall be included as the first page with each original contract scanned into Dynamics 365." While the City does have an internal control policy in place regarding the SAM exclusion verifications of suspended or debarred entities, the City did not always adhere to the policy when entering into covered transactions. During testing of the AL #16.922 Equitable Sharing Program, AL #21.027 Coronavirus State and Local Fiscal Recovery Funds, and AL #66.468 Capitalization Grants for Drinking Water State Revolving Fund grant programs, we noted one out of five instances (20%), one out of twelve instances (8%), and one out of one instance (100%), respectively, in which the programs had a payment to a vendor of more than $25,000 and no evidence the City checked the SAM exclusions, collected a certification from the entity, or added a clause or condition to the covered transaction with the vendor. Failing to have the appropriate controls in place may result in vendors who are suspended or debarred receiving federal funds. Prior to contracting with vendors that will be paid with federal funds, the City should follow its established policy and must verify the vendor is not suspended or debarred by checking the SAM exclusions, collecting a certification from the vendor, or adding a clause or condition to the covered transaction with the vendor. Evidence of actions taken to ensure proper suspension and debarment requirements must be maintained by all department of the City.